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And So It Begins

But more time for drinking with less money surely equals more Lidl Finkbrau? Bloody students...

With the news that Business, Innovation and Skills Department (including Universities, but without telling everyone Universities are included) is slashing £65m off budgets for next year, it’s pretty clear that you don’t need a Budget to economise.

And the even more telling part of this story? The fact that it is Lord Mandelson’s very own department that is wielding the axe.

I’ve no doubt we’re going to see more and more stories of this nature as the months go by. Perhaps even slipped out over the summer while they hope no one’s watching. It’s possible that this could lead to yet another death by a thousand cuts to the government. More likely though, they’re hoping that people aren’t likely to notice a little cut here, a little cut there, and particularly if they are not in areas that are going to hit the headlines.

Rather that than in next year’s budget issuing huge climb downs over growth forecasts (cos that one’s not looking too good either, Alistair) – literally weeks before a General Election – and being forced to drastically cut departmental budgets because they were a little too optimistic compared with last year. Either that or increase borrowing still further: surely suicidal in the run up to Voting Day as it would play right into the Tories hands.

But it is surely a sign that the government has accepted that overall expenditure must come down in cash terms, not just in real terms.

Or is it? After all, they only yesterday told us that they have £1bn to spend on electrifying railway tracks. An idea I support; and one that fits properly into Keynesian economic theory (infrastructure investment) – but I can’t help but feel that this is what should have been done instead of useless VAT cuts.

Or perhaps this all hints at another strategy. Could the election actually be called before the next budget? Labour, knowing defeat is inevitable, may decide it’s better to make the Tories be the ones who take the potentially unpopular decisions of cutting budgets and raising taxes. Because, make no doubt about it, taxes will have to go up somewhere. Reducing spending simply won’t be enough if we’re to service this mountain of debt we’re building up.

That strategy, perhaps seeing an election in March, may be the one that hopes for a Tory victory, a very small one in a hung Parliament, and then hoping they fail to deliver, leading to a second General Election within the year – one which could see Labour returned to power.

All a little far fetched, maybe. But you never know what Mandy’s up to. And all this on top of previous news freezing student loans, he’s clearly picked this fight with the Universities because he thinks it’s one he can win…

All we need now is for Gordon Brown to emerge telling us that spending won’t be cut, that white is black and night is day and David Cameron is a jolly nice chap, really.